牧食记AgriPost.CN English News Chinese agri-giant Wens’: A net loss of USD 385.2 Mill; pig farming-11.63%

Chinese agri-giant Wens’: A net loss of USD 385.2 Mill; pig farming-11.63%

Wens’ half-yearly report: A net loss of CNY 2.5 Bln ($385.2 Million) in 2021H1; gross profit margin of pig farming -11.63%

The latest Wens’ 2021 half-yearly report shows that, due to the sharp drop in pig prices and the increase in feed ingredients prices, the company recorded a net loss of about CNY 2.5 billion ($385.2 million) in the first half of this year. In contrast, the net profit in the same period last year exceeded CNY 4.15 billion ($638.3 million). Its operating revenue also fell nearly 15% YOY to CNY 30.63 billion ($4.71 billion).

Wens reported that in the first half of 2021, the company’s average pig sales price was CNY 23.33 ($3.59)/kg, down 31.34% YOY. Coupled with the continuous rise in feed ingredients, the gross profit margin of its live hog products was 11.63%, down more than 50% YOY.

Wens sold 4.6873 million pigs (including live hogs and pork) in the first half of 2021, a decrease of 3.67% YOY. Pig sales revenue was CNY 13.125 billion ($2.02 billion), a decrease of 36.17% YOY. In stark contrast, it sold 484 million broilers (including live chickens, fresh products, and cooked food) during the same period for an increase of 0.97% YOY. The sales of broiler chickens reached CNY 12.865 billion ($1.98 billion), an increase of 30.96% YOY.

As the foundation work continues to be strengthened in the past two years, Wens’ business has been steadily advanced in accordance with the established plans and goals. Among them, the poultry sector has been promoted steadily, with a competitive advantage in the industry.

Pig production has returned to the normal track; both its system and performance have improved in an all-around way.

According to its half-yearly report, “The overall appearance of the company is excellent, the staff is full of vitality, and the company’s management ability and management level have been improved at the same time.”

01 Pig production has fully recovered

An important turning point for Wens’ pig farming business this year maybe that its commercial pig production returned to the million-head level in June.

It is known that the number of self-produced piglets of Wens increased month by month in the first half of 2021, of which 1.2 million were produced in June, and the production cost of piglets continued to decline. The average production cost of piglets dropped to CNY 470 ($72.29) per head at the end of June and even less than CNY 350 ($53.83) per head in some excellent breeding pig farms.

The improvement of production performance is inseparable from the construction of high-reproduction sow herds. At present, the proportion of high-reproduction sows has increased to 95%, which is more than 1 million heads in stock.

“The sow’s self-supply ability has been greatly improved, and the breeding system can achieve self-circulation,” Wens said.

The company also disclosed in its exchange with investment institutions that the complete cost of pig farming in the first half of 2021 was about CNY 25 ($3.85)/ kg (excluding other profits and losses such as eliminated sows), mainly due to the high price of outsourced piglets, lower capacity utilization, higher fixed costs, and increased input on African Swine Fever (ASF) prevention.

“The company has suspended outsourcing piglets since May, and the cost is expected to return to normal in the fourth quarter,” Wens pointed out.

According to the current prevention and control level and requirements, the company’s complete cost target in the second half of 2021 will be declined to about CNY 20 ($3.08)/ kg, and to less than CNY 16 ($2.46)/ kg next year.

At present, although there is no pandemic of ASF, it still occurs sporadically in many areas, which still has a great impact on the pig industry. Wens said that its subordinate Yunnan Pig Farming Company has summed up a set of effective prevention and control systems, which are being replicated and extended to its regional companies, “The application results fully verify its effectiveness.”

The half-yearly report also revealed that the commercial piglet’s production capacity of the breeding farms that Wens has approved for construction is about 60 million, of which the completed pig farms with a piglet’s production capacity of 46 million. In addition, according to the development status and changes in the industry, Wens timely adjusted the development pace of the pig business suspended large-scale investment in the construction of new pig breeding farms, and shifted the focus to improve pig production management and production performance.

However, for the earlier target of 12 million pigs this year and 20 million next year, Wens said there was no adjustment for the time being.

02 Improved operation capacity on poultry

Wens made an outstanding performance in poultry in the first half of 2021, making a substantial turnaround compared with the same period last year. The gross profit margin of its broiler business reached 13.99%, an increase of 25% YOY.

According to reports, the selling/production rate of Wens’ broilers in the first half of 2021 was 94.5%, maintaining a historically high level for many consecutive months (the highest was 94.58% in the first half of 2018). Although affected by the increase of feed ingredients prices, the feed formula was adjusted according to the market so that FCR is still lower than 2.9, which is close to the levels of 2018 and 2019. Overall, its production performance is in the leading position in the industry.

At the same time, Wens’ poultry sector has undergone vigorous transformation and upgrading, and the company’s existing single shift slaughtering capacity of broilers has reached about 256 million per year.

“When the live chicken market is booming, sign a sales contract, lock in the price, speed up the sales of live chicken, and withdraw funds quickly,” Wens explained. “When the market goes down, through slaughtering and processing to store or selling fresh products, divert the pressure from live chicken sales, ensure the stability of the live chicken market, and improve the overall profit of live chicken and fresh products.”

In the first half of 2021, Wens’ poultry sector sold a total of 69 million fresh chickens, an increase of 33.51% YOY, and the proportion of fresh chicken sales to its total sales increased to 13.5%.

AgriPost.CN is an animal protein community connecting China and the world and a partner of global agribusiness media such as Misset and Asian Agribiz. Our co-founder & managing editor, Allen Shu, is a correspondent for Misset’s Pig Progress magazine in China. (contact@agripost.cn)

牧食记AgriPost.CN 专注中国农牧食品产业原创报道与决策参考;本站原创内容,未经书面许可,谢绝转载,违者追究法律责任。授权联络 editor@agripost.cn
https://www.agripost.cn/2021/08/26/chinese-agri-giant-wens-a-net-loss-of-usd-385-2-mlnpig-farming-11-63/
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